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UNITED STATES v. JOHNSON

August 9, 1994

UNITED STATES OF AMERICA,
v.
RICHARD I. JOHNSON, SR., RICHARD I. JOHNSON, JR., JOSEPH ROSINSKI and JOAN CHUBA, Defendants.



The opinion of the court was delivered by: LESLIE G. FOSCHIO

REPORT AND RECOMMENDATION

 JURISDICTION

 This matter was referred to the undersigned by the Hon. Richard J. Arcara on March 11, 1992 for disposition of all pretrial matters pursuant to 28 U.S.C. § 636(b)(1)(A) and for report and recommendation pursuant to § 636(b)(1)(B). It is currently before the court on the Defendants' motion to dismiss Counts II, III and portions of Count I of the Indictment, and the motion to suppress evidence seized pursuant to three search warrants. The Defendants' motions for pretrial discovery, severance, to strike surplusage, for hearings directed at the search warrants and for inspection of the Grand Jury instructions are addressed in a separate Decision and Order.

 BACKGROUND and FACTS

 The Defendants are charged, in a twenty-one count Indictment dated February 26, 1991, with violations of 18 U.S.C. §§ 1001 and 2, 42 U.S.C. § 6928(d), and 18 U.S.C. §§ 371, 2, 152, 1341 and 1623. Specifically, Richard I. Johnson, Sr., Richard I. Johnson, Jr. ("the Johnsons"), and Rosinski ("Rosinski") are charged in Count I with conspiracy to violate the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. §§ 6928(d)(2) and 6928(d)(3), to make false statements to a government agency, specifically the United States Environmental Protection Agency ("EPA") in violation of 18 U.S.C. § 1001, and to willfully defraud the United States. At all times relevant to this Indictment, the Johnsons are alleged to have controlled a business known as Envirotek Ltd. ("Envirotek"), with offices at 849 Delaware Avenue, Buffalo, New York, and a plant/facility at 4000 River Road, Tonawanda, New York. See Indictment, at 4. Envirotek was held out to be a facility authorized to conduct the treatment, storage and disposal ("TSD") of hazardous wastes, and was operating pursuant to "interim status," as it had not been granted final authorization for a permit by either New York State or the EPA. See Indictment, at 4. As an "interim status" facility, Envirotek was permitted to transport, store, and treat hazardous wastes through the proper operation of certain distillation "stills," but not to dispose of them on site. See Indictment, para. 8, at 5. It is also alleged that Envirotek continued to have an excessive number of drums of hazardous waste at its River Road facility, and had entered into a Consent Order with the New York State Department of Environmental Conservation ("DEC") to limit the number of drums at the site, and to cease all "gate receipts" of hazardous wastes until Envirotek made a substantial reduction of such drums on site. See Indictment, para. 11, at 6.

 In furtherance of the conspiracy, it is alleged that the Defendants committed several overt acts, as follows: (1) During 1982 and 1983, with the knowledge of the Johnsons, drums of hazardous waste were placed in pits on property adjacent to the River Road facility and covered with fly ash. See Indictment, at 7. (2) During 1984 and 1985, with the knowledge of the Johnsons and Rosinski, employees of Envirotek dumped the contents of drums containing hazardous waste into drains and onto property adjacent to the river Road facility. See Indictment, at 8. (3) Between 1982 and 1988, with the knowledge of the Johnsons, hazardous wastes from Envirotek distillation operations were disposed of directly onto the ground outside the building which housed the stills. *fn1" See Indictment, at 8-9. (4) During 1985, with the knowledge of the Johnsons and Rosinski, hazardous waste was dumped in a warehouse annex at the River Road facility. See Indictment, at 9. (5) During February 1988 and July 1989, with the knowledge of Richard I. Johnson, Jr., hazardous wastes from In & Out Printing, Inc. and Motorola, Inc. were burned by an Envirotek employee. See Indictment, at 10. (6) During the spring of 1987, Rosinski illegally disposed of hazardous wastes by driving a tanker truck with its valve open on property immediately adjacent to the River Road facility. See Indictment, at 10. (7) Between 1982 and 1989, the Johnsons allowed the storage of more drums of hazardous waste at the River Road facility than approved by DEC regulators. See Indictment, at 10. (8) In March 1985 and on or about September 1, 1988, Richard I. Johnson, Sr. filed reports in response to a RCRA Facility Assessment ("RFA"), wherein he stated there had been no releases of hazardous waste from or at the Envirotek facility. See Indictment, at 10. (9) On or about January 24, 1989, Richard I. Johnson, Jr. in response to questions posed by on-site RCRA inspectors, stated that there had been no release of hazardous waste from the Envirotek facility. See Indictment, at 11. (10) On June 16, 1988, Richard I. Johnson, Sr., in a RCRA permit application, attached a lease for the River Road facility and falsely certified that the facility was owned by 4000 River Road Ltd., and that a valid lease existed between 4000 River Road Ltd. and Envirotek. Indictment, at 11.

 In Count II, the Johnsons are accused of the illegal disposal of hazardous waste from a still (the "DCI still") from approximately 1984 until 1988. In Count III, the Johnsons are accused of the illegal disposal of contaminated solvent mixtures from another still (the "Brighton still") from approximately 1982 until 1988.

 In Count IV, the Johnsons are accused of making false statements to the DEC in an application for a permit for a Treatment, Storage and Disposal ("TSD") facility, a matter within the jurisdiction of the EPA. In Count V, Richard I. Johnson, Sr. is accused of making false statements to the EPA in that he represented, in a RFA, that there had been no release of hazardous wastes or hazardous waste constituents from Envirotek operations. In Count VI, Richard I. Johnson, Jr. is accused of making false oral statements to agents of the EPA. In Count VII, Richard I. Johnson, Jr. is accused of treating hazardous wastes, from In & Out Printing, Inc., without a permit. In Count VIII, Richard I. Johnson, Jr. is accused of making false statements for the purpose of compliance with EPA regulations with regard to the hazardous wastes from In & Out Printing, Inc.

 In Count IX, Richard I. Johnson, Jr. is accused of scheming to defraud In & Out Printing, Inc. by use of the United States Postal Service. In Count X, Richard I. Johnson, Sr. is accused of the unauthorized treatment of hazardous wastes from Motorola, Inc. In Count XI, Richard I. Johnson, Jr. is accused of making false statements for the purpose of compliance with EPA regulations with regard to the hazardous wastes from Motorola, Inc. In Count XII, Richard I. Johnson, Jr. is accused of mail fraud with regard to the handling of hazardous wastes from Motorola, Inc. In Counts XIII, XIV and XV, Richard I. Johnson, Jr. is accused of making false statements for the purpose of compliance with EPA regulations.

 In Count XVI, the Johnsons and Defendant Chuba are accused of conspiracy to make false oaths in a bankruptcy proceeding, to commit bankruptcy fraud, and to make false declarations before a Grand Jury. In Count XVII, these Defendants are accused of fraudulently concealing property belonging to the bankrupt estate of Envirotek Ltd. In Count XVIII, the Johnsons are accused of withholding information from the bankruptcy trustee, including the total sales generated by Envirotek. In Count XIX, Richard I. Johnson, Jr. is accused of testifying falsely before a United States Grand Jury. In Counts XX and XXI, Richard I. Johnson, Sr. is accused of making a false oath in a bankruptcy proceeding on two separate occasions.

 On March 12, 1992, Chuba filed a motion seeking severance. In an order filed March 31, 1992, this court adjourned the motion pending the completion of discovery. On March 25, 1992, Richard I. Johnson, Sr. and Rosinski filed discovery requests and a request for a bill of particulars. The Government filed its response to the discovery requests and a bill of particulars on April 2, 1992. On October 23, 1992, Rosinski filed a motion seeking severance. On May 25, 1993, the Government filed a supplemental bill of particulars, and an filed an addendum to it on June 2, 1993.

 On June 25, 1993, Richard I. Johnson, Sr. filed an omnibus motion seeking the dismissal of Counts II and III and a portion of Count I of the Indictment on the grounds that certain EPA regulations known as the "mixture" and "derived-from" rules had been invalidated and that the Indictment, insofar as it alleged the unlawful treatment and/or disposal of "hazardous wastes," relied on those rules. Additionally, Johnson argued that the distillation process referred to in Count III was not subject to RCRA regulation. Johnson also sought the deletion of surplusage in the Indictment, a further bill of particulars, a hearing pursuant to Franks v. Delaware, 438 U.S. 154, 57 L. Ed. 2d 667, 98 S. Ct. 2674 (1978), regarding the veracity of the affidavit upon which a search warrant was issued, the suppression of evidence seized pursuant to the execution of three search warrants based on the alleged overbreadth of the seizure authorization, a hearing regarding the review by the United States Attorney's Office of seized legal files, severance of Counts I through XV from Counts XVI through XXI, disclosure of evidence which the Government intends to offer pursuant to Fed.R.Evid. 404(b), and disclosure of Brady and Jencks Act material. On June 28, 1993, Rosinski filed a motion seeking the dismissal of Count I of the Indictment, a bill of particulars, pretrial discovery, and suppression of evidence. In a letter dated July 2, 1993, counsel for Richard I. Johnson, Jr. joined in all the motions of his codefendants.

 On August 17, 1993, the Government filed its Response to the Omnibus Motions of the Johnsons and Rosinski. The Government opposed the motions to dismiss, to strike surplusage, and to suppress. The Government provided some further particularization, but opposed most requests. The Government agreed to the defense request for a hearing regarding the alleged unauthorized inspection of legal files by the United States Attorney's Office, agreed to a severance of the "bankruptcy" counts (Counts XVI - XXI) from the "hazardous waste" counts (Counts I - XV) of the Indictment, reiterated its previous position that it did not intend to introduce Rule 404(b) evidence, and acknowledged its responsibilities under Brady v. Maryland, 373 U.S. 83, 10 L. Ed. 2d 215, 83 S. Ct. 1194 (1963) and the Jencks Act.

 On November 15, 1993, Richard I. Johnson, Sr. submitted a Reply Memorandum and a Reply Affirmation of his attorney. In it, he argued that Counts II and III and parts of Count I are facially insufficient, in reliance on the Report and Recommendation of Magistrate Judge Robert P. Murrian in United States v. Recticel Foam Corporation, et al., Cr. No. 2-92-78 (E.D.Tenn., dated August 10, 1993). Oral argument was heard before the undersigned on November 18, 1993, at which time the court scheduled the filing of any additional papers. On November 30, 1993, the Government filed a Statement as to Allegation of Hazardous Waste in the Indictment. In it, the Government outlined the anticipated proof as to the hazardous wastes in the challenged counts, acknowledged the invalidation of the "mixture" and "derived-from" rules, and stated that neither rule was used in the charge to the Grand Jury nor would be requested to be included in a charge to the jury at trial. See Government's Statement, filed November 30, 1993, at 10.

 On December 29, 1993, Richard I. Johnson, Sr. filed a motion and Memorandum of Law seeking the dismissal of Counts I through III of the Indictment, inspection of the Grand Jury instructions, and postponement of the determination of all pending dismissal motions until objections to the Report and Recommendation in the Recticel Foam case are decided at the district court level. On February 2, 1994, the Government filed a Memorandum in Response to the motion, opposing the relief sought, and two affidavits of Assistant United States Attorney Littlefield. In the first affidavit, AUSA Littlefield stated that neither the "mixture" nor the "derived-from" rules were presented to the Grand Jury as a legal basis for the Indictment. In the second affidavit, AUSA Littlefield stated that he had been in contact with the attorneys handling the Recticel Foam case, and the appeal of the Report and Recommendation had been suspended, leaving "no reasonable basis to believe that there will be any resolution of the Tennessee case in the near future...." See Affidavit of AUSA Littlefield, filed February 2, 1994, at 2.

 Richard I. Johnson, Sr. filed a Reply Memorandum on February 17, 1994. On May 13, 1994, he filed a Notice of Supplemental Authority, drawing the court's attention to a recent decision by the Environmental Appeals Board ("EAB") of the EPA, In re Hardin County, 1994 WL 157572 (E.P.A.). The Government filed its response to this submission on June 8, 1994.

 For the reasons that follow, the Defendants' motion to dismiss Counts II and III, and part of Count I should be DENIED, and the motion to suppress should be DENIED.

 DISCUSSION

 1. The Motion to Hold the Motion to Dismiss in Abeyance.

 As a preliminary matter, the motion of Richard I. Johnson, Sr., made December 29, 1993, to postpone the determination of all pending dismissal motions until such time as the Government's objections to the Report and Recommendation in the Recticel Foam case are resolved by the district court, is DENIED. Based on the averments of Assistant United States Attorney Littlefield, that proceedings in the Recticel Foam matter have been suspended "pending possible further proceedings before the Magistrate/Judge" and that "there is no reasonable basis to believe that there will be any resolution of the Tennessee case in the near future..." (see Affidavit of AUSA Littlefield, filed February 2, 1994, at 2), the court finds no reason to postpone the determination of the pending dismissal motions in this case. *fn2"

 2. Introduction.

 To assist the district court in understanding the discussion that follows, the following background information, by way of an introduction, is set forth: (1) the relevant provisions of RCRA, in particular the "mixture" and "derived-from" rules," which form the basis of the Defendants' motion to dismiss, (2) a brief history of the challenged rules, as it relates to the Defendants' motion, and (3) an examination of the arguments of the parties and resolution of the motions.

 (a) The relevant provisions of RCRA.

 In the relevant portions of Count I, the Defendants are charged with conspiracy to violate 42 U.S.C. § 6928(d)(2). Section 6928(d)(2) prohibits the knowing treatment, storage or disposal, without a permit or in knowing violation of any material condition or requirement of such permit, of "any hazardous waste identified or listed under [§§ 6921 et seq.]..." (emphasis added). In Counts II and III of the Indictment, the Defendants are charged with violating 42 U.S.C. § 6928(d)(2)(A) in that they illegally disposed of hazardous wastes.

 Title 42 U.S.C. § 6921(a) directs the Administrator of the EPA to "develop and promulgate criteria for identifying the characteristics of hazardous waste, and for listing hazardous wastes, ... taking into account toxicity, persistence, and degradability in nature, potential for accumulation in tissue, and other related factors such as flammability, corrosiveness, and other hazardous characteristics." See 42 U.S.C. § 6921(b). Title 42 U.S.C. § 6903(5) defines "hazardous waste" as:

 
a solid waste, which because of its quantity, concentration, or physical, chemical or infectious characteristics may --
 
(A) cause, or significantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness; or
 
(B) pose a substantial present or potential hazard to human health or the environment when improperly treated, stored, transported, or ...

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